Correlation Between Home Depot and Holley
Can any of the company-specific risk be diversified away by investing in both Home Depot and Holley at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Home Depot and Holley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Holley Inc, you can compare the effects of market volatilities on Home Depot and Holley and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Home Depot with a short position of Holley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Holley.
Diversification Opportunities for Home Depot and Holley
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and Holley is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Holley Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holley Inc and Home Depot is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Home Depot are associated (or correlated) with Holley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holley Inc has no effect on the direction of Home Depot i.e., Home Depot and Holley go up and down completely randomly.
Pair Corralation between Home Depot and Holley
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.54 times more return on investment than Holley. However, Home Depot is 1.87 times less risky than Holley. It trades about 0.26 of its potential returns per unit of risk. Holley Inc is currently generating about 0.08 per unit of risk. If you would invest 39,300 in Home Depot on August 30, 2024 and sell it today you would earn a total of 3,419 from holding Home Depot or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Home Depot vs. Holley Inc
Performance |
| Timeline |
| Home Depot |
| Holley Inc |
Home Depot and Holley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Holley
The main advantage of trading using opposite Home Depot and Holley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Holley can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Holley will offset losses from the drop in Holley's long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies |
| Holley vs. Dorman Products | Holley vs. Monro Muffler Brake | Holley vs. Standard Motor Products | Holley vs. Stoneridge |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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